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f6337d45-c105-4277-9df8-ec602dbd1231.pdf
November 2, 2015
Summary of Terms
This Summary has been prepared by Platinum Group Metals Ltd ('PTM') and describes the terms that form the basis of a proposed transaction between Liberty Metals & Mining Holdings, LLC, a subsidiary of Liberty Mutual Insurance, and PTM ('Proposed Transaction'). All dollar amounts in this summary are in U.S. dollars unless otherwise specified.
Borrower
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Platinum Group Metals Ltd. ('PTM' or the 'Company')
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Guarantor
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Platinum Group Metals (RSA) Proprietary Limited ('PTM (RSA)')
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Lender
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Liberty Metals & Mining Holdings, LLC ('LMM')
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Amount / Availability
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USD $40,000,000 in a single-advance, secured facility (the 'Loan')
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Use of Proceeds
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For the development, construction and working capital needs of the Western Bushveld Joint Venture Project (the 'Project')
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Interest Rate
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12-month USD LIBOR (the 'Base Rate') plus 9.50%
Following the initial drawdown, interest will accrue and be capitalized on a monthly basis until December 31, 2016. Beginning with the quarter ending March 31, 2017, interest will accrue and be payable quarterly. Interest will be calculated on a 360-day calendar year.
Default rate: Base Rate plus 12.50%
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Maturity Date
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December 31, 2020
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Debt Repayment
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No payments of principal or capitalized interest will be due until December 31, 2018 at which point in time 20% of the outstanding principal and capitalized interest will be due and payable. Thereafter the remaining 80% of outstanding principal and capitalized interest will amortize and be repaid ratably at 10% per calendar quarter over the following 8 quarters (Q1, Q2, Q3, Q4 of 2019 and 2020) ending with the December 31, 2020 quarter.
If PTM exercises the Repurchase Option (as defined below) before January 1, 2019, repayment of principal and capitalized interest may be deferred to begin with the quarter ending September 30th, 2019 at which point in time 10% of the outstanding principal and capitalized interest will be due and payable, followed by 10% on
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December 31, 2019. Thereafter the remaining 80% of outstanding principal and capitalized interest will be repaid as to 20% at the end of each calendar quarter to December 31, 2020.
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Mandatory Prepayment
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50% of Excess Free Cash Flow shall be applied quarterly to the outstanding principal balance beginning with any Excess Free Cash Flow generated during the quarter ending March 31, 2019.
'Excess Free Cash Flow' for period means cash flow from operations less capital expenditures and debt service.
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Production Payment
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Pursuant to, and in consideration of the Loan, LMM will receive production payments (the 'Production Payment') equal to 1.5% of Proceeds.
'Proceeds' means the gross proceeds received by or credited to Maseve Investments 11 (Pty) Ltd. or its successors or permitted assigns ('Maseve') from the sale or disposition of all minerals produced at or from the mine, mill and related facilities and properties of the Western Bushveld Joint Venture less charges or costs levied by the smelter or refinery incurred in connection with the minerals for which the related payment or credit is received.
Production Payment amounts due will accrue and be capitalized through December 31, 2017 at the Base Rate plus 9.50%. Commencing January 1, 2018, PTM shall, within 10 Business Days of receipt from the sale of products, pay to LMM the Production Payment, converted to USD. All Production Payments accruing on or before December 31, 2017 and all interest thereon shall be due and payable to LMM on the first payment date, which will occur in January 2018.
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Repurchase Option
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PTM will have the right, exercisable in its sole discretion, to repurchase, prior to December 31, 2021, 1.00% of the 1.5% Production Payment for payment of:
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USD $17.5 million, if the Repurchase Option is exercised before January 1, 2019; or
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USD $20.0 million, if the Repurchase Option is exercised between January 1, 2019 and December 31, 2021;
plus in each case all accrued and, if applicable, all capitalized Production Payment amounts through the end of the month of repurchase (the 'Repurchase Option'). Any such repurchase may only be made on the last Business Day in a calendar month.
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For the avoidance of doubt, should PTM exercise the Repurchase Option, the remaining Production Payment rate will be 0.5% (being 1.5% - 1.00% = 0.5%).
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Termination Fee
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PTM will have the right to terminate the Production Payment at a cost based on the 5% NPV of the remaining Initial LOM planned annual cash flows under the Production Payment, at metal prices current at the time of a termination notice, calculated on the 1.5% Production Payment, or if the Repurchase Option is exercised, based on a 0.5% Production Payment.
A default under the Production Payment agreement, a default on any Indebtedness greater than $1,000,000 (including the Sprott Facility and the Credit Agreement) and certain other events of default triggers the payment of the termination fee to LMM.
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Refinancing
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PTM will have the right to refinance the Sprott Facility or the LMM Loan, but only to the extent that the Person providing such refinancing indebtedness acknowledges in writing to LMM that LMM's rights to Production Payments will be made in priority to any payments made under any refinancing indebtedness absent a default under such indebtedness.
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GENERAL
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Security and Guarantees
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The Loan and Production Payment will be guaranteed, on a joint and several basis, by PTM and PTM (RSA) and will be secured by a second lien on (i) the shares of PTM (RSA) held by PTM and (ii) all current and future assets of PTM, including without limitation, all accounts and notes, receivables, chattel paper, cash, cash equivalents, deposit accounts, certificates of deposit, evidence of indebtedness to the Company of any kind or description, tangible real or person property, including all shares, equity interest, loans or advances made to or that relate to the Company.
PTM will ensure the security package includes all proper indemnifications and cross guarantees to satisfy LMM.
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Conditions Precedent to Effectivness of Agreements
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Usual and customary conditions including but not limited to:
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Completion, technical, legal and financial due diligence.
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Final and complete documentation including a credit agreement, Production Payment agreement, inter-creditor agreement with the lenders under the Sprott Facility, in each case on terms satisfactory in form and substance to LMM.
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3. Applicable third party and regulatory approvals.
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Conditions Precedent to Funding
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Usual and customary conditions including but not limited to:
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Bring down of certain representations and warranties.
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Absence of the occurrence of a default or event of default under the documentation.
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Approval of the South African Reserve Bank.
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Funding of the USD $40 million Sprott Facility.
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Representations and Warranties
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Customary and usual for facilities and agreements of this nature, including those agreed by the Company in the Sprott Facility, as well as:
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Relating to compliance with Foreign Corrupt Practices laws and Sanctions Laws.
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Those customarily contained in Production Payment agreements (or similar agreements).
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Covenants
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Customary and usual for facilities and agreements of this nature, including those agreed by the Company in the Sprott Facility, as well as:
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Compliance with applicable Foreign Corrupt Practices laws and Sanctions laws.
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Use of net insurance proceeds.
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Delivery of Material Contracts, Budgets and Mine Plans (and all amendments and revisions thereto).
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Rights of inspection.
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Submission to Jurisdiction of PTM (RSA).
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Right of first offer granted to LMM for any non-equity financing by PTM or its subsidiaries, as long as any Loan amount is outstanding.
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Those customarily contained in Production Payment agreements (or similar agreements).
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Events of Default
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Customary and usual for facilities and agreements of this nature, including those agreed by the Company in the Sprott Facility, as well as:
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An agreement as to the payment of the Termination Fee as liquidated damages for the Production Payment if an Event of Default occurs.
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Failure to comply with the terms of the Production Payment agreement.
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